Mastercard Malaysia Determined To Tackle Credit Card Fraud

By Nor Faridah Rashid

KUALA LUMPUR, Dec 30 (Bernama) -- Mention credit card fraud and many eyes would usually turn to Malaysia. Although there hasn't been strong enough evidence to imply Malaysia as a centre of credit card fraud as claimed by certain quarters, adverse publicity from some foreign media reports have dented the country's image somewhat.
And it's with this in mind that MasterCard Malaysia has taken up the challenge to deploy Magneprint, a technology developed by MasterCard International Incorporated and Mag Tek Inc, to help prevent card skimming.
Skimming, the latest type of payment card fraud, involves a perpetrator fraudulently capturing the data stored on the magnetic stripe (of a credit card) through an electronic device or other illicit means. The data is then used to produce a duplicate or cloned card, which can then be used for fraudulent purposes.
Come 2003, Malaysia could see skimming being curbed once financial institutions adopt Magneprint, the payments' industry most advanced risk anagement tool.
Jim Cheah, MasterCard International vice-president and country manager for Malaysia and Brunei, said the adoption of Magneprint would be a national initiative amidst the rampant credit card fraud factor in Malaysia.
Cheah, who recently announced successful test results of the Magneprint beta test which began in June, hoped that the technology could be rolled out in the country in 2003 upon consensus by all member institutions which would provide the direction on how fast it could make its appearance.
The beta test was carried out in collaboration with four of MasterCard's member financial institutions, namely CitiBank Bhd, HSBC Bank Malaysia Bhd, MBf Cards (M'sia) Sdn Bhd and Southern Bank Bhd.
Magneprint can help to prevent skimming by identifying a cloned card when introduced at the point of sale.
"The technology is there and we hope to adopt it as fast as possible. I am optimisic that if we can get general consensus (from member financial institutions), we can start beginning of next year," Cheah said.
Magneprint is the first technology that proactively helps prevent card skimming by using the "intrinsic" physical properties or a magnetic stripe (which are unique to every card) to differentiate between an original and a cloned card.
Cheah said Malaysia took up the challenge to have the test conducted here as "we want to do everything and anything possible to fight fraud. Members are keen to look at new technology and fraud is obviously on top of everybody's mind.
There are concerns, especially skimming fraud."
Reports have indicated that 50 percent of 78 credit card frauds reported in 2001 involved skimming scams. Losses from credit card fraud in 1999 totalled RM24 million, 2000 (RM28 million) and 2001 (RM40 million).
Joel S.Lisker, MasterCard International's senior vice president (Security and Risk Management), said credit card fraud is a worldwide problem.
"If we can get our arms around the counterfeit and that is the major fraud here (in Malaysia), your fraud will drop like a rock," he said.
Cheah said confidence was something very important as consumers wanted to feel comfortable and not get credit card statements showing transactions that they did not undertake.
"So (if) we can actually implement this technology (Magneprint) and stop the skimming from actually happening, we also improve consumer confidence which is critical to the payments industry."
Cheah said if consumers did not have confidence in the card payments industry, then they would not use the card.
Magneprint, he said, was for the health of the card payments industry.
Lisker said it would take about three months to convert to the Magneprint system.
"If you can change the whole system in three months, that is a fantastic accomplishment," he said.
As for competition from other credit card companies concerning fraud prevention, Lisker said: "We think when it comes to fraud, we view it as non-competitive. We work very well together like with Visa, American Express, Diners and JCB.
"The enemies that we have are the same enemies. They do not discriminate.
They are out to basically skim a plastic and use it to the disadvantage of a company and the card member."
Liskser said Magneprint protects all parties involved in a card transaction -- financial institutions, merchants and consumers.
Issuers will benefit from reduced fraud rates and increased profitability, merchants will reduce chargebacks resulting from cloned cards, and consumers will have increased peace of mind when using their MasterCard card, he said.
Malaysia and others like Japan, Taiwan, Australia and Hong Kong, have been named as one of the countries which registered some of the world's highest incidence of card fraud.
With the roll out of Magneprint, MasterCard officials are hoping that they can tackle skimming head on in Malaysia.